2008 11 12 IAB MinutesINVESTMENT ADVISORY BOARD
Meeting
November 12, 2008
CALL TO ORDER
Regular meeting of the La Quinta Investment Advisory Board was called to order at the
hour of 4:30 p.m. by Chairman Ross, followed by the Pledge of Allegiance.
PRESENT: Board Members Ross, Moulin, Park and Board Member
Deniel (4:40)
ABSENT: None
OTHERS PRESENT: John Falconer, Finance Director and Vianka Orrantia, Senior
Secretary
II Public Comment -None
III CONFIRMATION OF AGENDA
Mr. Falconer requested that the synopsis handout be added to the agenda under
Item B, Correspondence and Written Material.
Mr. Falconer advised that staff received proposed changes to the meeting
minutes from Board Member Deniel and she requested that they are added as
amendments to the meeting minutes.
IV CONSENT CALENDAR
A. Approval of Minutes of Special Meeting on October 15, 2008 for the
Investment Advisory Board.
Staff advised of the proposed changes by Board Member Deniel as
follows:
Page 2: Business Session A, second paragraph should read:
Mr. Falconer advised that at the previous Board meeting, there was a
discussion by Board member Moulin regarding the yields of treasuries and
modification of the 30% cap ~t~r at# SE's with the investment policy,
[...]
Page 3: Business Session A, fourth paragraph should read:
Board member Deniel stated that the stability of the portfolio is basa~f ort
what is allowed to invest in.
Investment Advisory Board
Minutes
November 12, 2008
Page 5: Business Session B, fifth paragraph should read:
Board Member Deniel advised that page 3 was very v+able useful to the
Board [...]
Page 6: Item in question, was page 5 not required or required:
Should read: Page 5: Required
Board Member Rassi advised of the following corrections:
Page 7: second paragraph should read:
In response to Board Member Deniel, Mr. Falconer advised that the TOT
collected ~y_fi1~t3 hotel is paid directly to the City a month after it is dae
~olleet
E..~•
Page 7: sixth paragraph should read:
Board Member Rassi commented that he felt that the suggested changes
~_Board,Member____lir~ to the Treasurer's Report would be art of nta
advantage to the Treasurer's functions.
Board Member Deniel suggested that after each agenda item discussed,
that a summary be given for clarity of the meeting minutes. Board
concurred.
MOTION - It was moved by Board Members Rassi/Park to approve the
minutes of October 15, 2008, as amended. Motion carried unanimously.
V BUSINESS SESSION
A. Transmittal of Treasury Report for September 2008
Mr. Falconer presented and reviewed the staff report advising the Board
that the portfolio decreased by 517 million due to the following: 511
million in debt service payments, 56.2 million in capital projects, 54.7
million in low-moderate income apartments located on Avenue 48`" and
Adams Street, along with bridge improvements at Avenue 52, in addition
to street improvements along Highway 111, and the balance of
5200,000 in SilverRock.
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Investment Advisory Board
Minutes
November 12, 2008
Mr. Falconer reported that the portfolio maturity remained the same, with
the 30% commercial paper limitation met due to the portfolio decreasing
in size. Mr. Falconer also reported that a Freddie Mac piece matured but
was not reinvested due to the decline in cash balances; therefore it was
replaced with asix-month T-Bill. The overall portfolio performance has
decreased due to the current market, with the yields decreasing to
2.64% and the pooled cash investments at 2.81 %.
Mr. Falconer advised that his last three investments have been in T-Bills,
again due to the commercial paper limitation.
Board Member Moulin advised of the items discussed by the State
Treasurer, stating that it was to difficult to implement any type of help
with the consumer's mortgages, and further stated that the State will
give the money directly to the banks for distribution/application of the
funds.
It was also reported that the spreads on interest have narrowed with no
clarification whether GSE's have or do not have the full faith and credit
by the U.S.
MOTION - It was moved by Board Members Deniel/Moulin to approve,
receive and file the Treasury Report for September 2008. Motion carried
unanimously.
B. Discussion of Matters of Joint Interest to the Members of the City Council
and the Investment Advisory Board
Chairman Ross advised the Board of the scheduled joint meeting with the
City Council and the Investment Advisory Board on November 25`", 2008
at 7:00 p.m. in the Study Session room. He further advised that the
Board would need to submit items of discussion prior to the meeting so
that they can be placed on the agenda.
All Board members will be in attendance with the exception of Board
Member Moulin.
In response to Chairman Ross, Mr. Falconer advised that he would like to
discuss the investing of U.S. Treasuries.
The Board agreed to list the following as items to be discussed:
1) Thank Councilman Osborne for his years of service on the Investment
Advisory Board and City Council, along with congratulating Mayor
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Investment Advisory Board
Minutes
November 7 2, 2008
Adolph on his reelection to Mayor as well as to Councilman Sniff for
his reelection, and Councilwoman Franklin to her election to Council.
2) Reiterate the objectives of the investment policy; safety, liquidity and
yield.
3) Treasurer to discuss investing in U.S. Treasuries and the consequent
result of investing in U.S. Treasuries would be the lowering of the
yields.
MOTION - It was moved by Board Members Park/Deniel to approve the
discussion matters for the joint meeting on November 25, 2008.
C. Continued Discussion of the Investment Advisory Board 2008/09 Work
Plan
Mr. Falconer advised that page 7 reflected the recommended changes
from the previous Board meeting. Mr. Falconer stated that he felt that
the Board wanted to improve the Treasurer's Report without deleting any
pages from the report.
The Board along with Staff reviewed the Treasurer's Report and
made the following recommendations:
Page 2 & 3: Pages 2 & 3 are to be retained with no necessary
changes/deletions.
Page 4: Board concurred, along with the Treasurer to remove the
columns titled "surplus," in addition to the row titled "Investments
Agreements for Bond Proceeds and/or Reserve Funds."
Page 5: It was agreed upon by the Board to delete the columns
entitled "Surplus" and "Rank," the column "Book" will now read "Book
Value."
Page 6: It was agreed upon by the Board to delete the columns
entitled "Surplus" and "Rank," the column "Book" will now read "Book
Value."
Mr. Falconer advised of the three changes made to page 7 derived from
the previous Board meeting, the recommended changes were as follows:
Deletion of the "Par" column, the break down of purchases and maturities
of the bond funds, with the report reflecting S5 million maturing in
interest income in Money Market Mutual Funds, in addition to a separate
line item for checking and savings, which was previously reflected under
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Investment Advisory Board November 12, 2008
Minutes
"Yield to Maturity."
Page 7: The following changes were agreed upon by the Board:
reconcile page 7 to page 2, on page 2 the Treasurer needs to segregate
purchases from sales, the title "Mutual Funds" will remain as "Mutual
Funds," due to the source of the mutual fund purchases not being
identified, the second line of Mutual Funds will read "Reinvested Interest
Income" as opposed to Interest Income, and the sales will read "Mutual
Funds" in place of "Bond Draw."
MOTION - It was moved by Board Members Rassi/Deniel to approve the
suggested changes and continue the discussion of the Fiscal Year
2008/09 Work Plan to the December meeting.
VI CORRESPONDENCE AND WRITTEN MATERIAL
A. Month End Cash Report -October 2008
Mr. Falconer advised of the decrease in interest rates in LAIF and in U.S.
Treasuries.
Noted and Filed
B . Pooled Money Investment Board Report -August 2008 and LAIF
Conference Materials
Mr. Falconer advised of the record setting attendance at this year's LAIF
Conference. He further advised that in previous years, (with anywhere
from 5800 million to 51 billion to invest), the investments made by the
State were normally completed within 10 minutes. This year, they were
still investing after a half hours time; due the unavailability of quality
commercial paper, most investments made were placed into six-month T-
Bills.
Chairman Ross commented that the State had sold S5 billion of the
Revenue Anticipation Notes with a settlement date of six days.
Mr. Falconer advised that the State's focus has changed and their main
focus is now towards safety and credit analysis, with no investments in
asset backed commercial paper with more conservative investments.
Chairman Ross advised that it was reiterated that LAIF is secure from the
State and those cities with monies invested in LAIF belong to them.
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Investment Advisory Board
Minutes
November 7 2, 2008
Chairman Ross commented on two items of interest at the LAIF
Conference: the first one was 570 million in Country Wide Notes in the
pooled money account and the downgrade of these securities, and the
discussion by the Chief Investment Officer and the Finance investment
staff to keep or sell the securities. The matter was taken before the
State Treasurer and the decision was to keep the securities, at which
time Bank of America took over the guarantees. The second item of
interest was the actual investments of the remaining revenue anticipation
note proceeds and an offer from General Mills for 5400 million in
commercial paper at 4%, and the Chief Investment Officers decision to
pass on the offer because he felt it was a warning signal that their need
for cash might be to great for the times.
In response to Board Member Deniel, Mr. Falconer advised that the City
has never invested in Lehman Brothers paper although other cities and
counties do hold this type of commercial paper.
Noted and Filed
VII BOARD MEMBER ITEMS
In response to Chairman Ross, Mr. Falconer advised that the reporting period for
Form 700 is usually during the calendar year and will need to be filed sometime
in April.
VIII Adjournment
MOTION - It was moved by Board Members Deniel/Moulin to adjourn the
meeting at 5:55 p.m. Motion carried unanimously.
S mitted b ,~,~
~hiG6~%~~~1
Vianka Orrantia,
Senior Secretary
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